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Copper leads out-of-favour metals down
Tue Nov 14, 2006 9:57 AM GMT

By James Regan

SYDNEY (Reuters) - Base metals fell further out of favour on Tuesday, with key Shanghai and London futures prices weaker.

Shanghai copper futures were down between 1 and 2 percent in light volume trading after tumbling by the 4-percent daily limit on Monday as traders fretted over weak copper import data.

"The Chinese market on the surface looks weak as imports have dropped 22 percent in the January to October period," BaseMetals.com sector analyst William Adams said in a client note.

The most active Shanghai January contract dropped to 63,950 yuan, from 65,060 yuan at the close on Monday. Shanghai's spot copper traded between 66,050 yuan and 66,450 yuan.

London Metal Exchange three-month copper was quoted down $75 against the late kerb at $6,860 a tonne.

News that some unions at Codelco, the world's largest copper producer, could be voting on a new contract by the end of the week helped deflate sentiment toward copper, according to traders.

"Eyes will be on the talks between Codelco and the unions this week," said BNP Paribas analyst David Thurtell in a commodities report.

More than 6,000 workers at Codelco Norte, the company's largest division, have to negotiate new wage and benefit deals before current contracts expire on December 31. Codelco churns out about a third of all the copper from Chile.

On Friday, copper dropped below $7,000 and the breakdown on the technical charts triggered selling across most metals.

Metals also failed to get a lift on news that the United States' biggest pension fund, California Public Employees' Retirement System (CalPERS), had approved a maiden investment of $500 million in commodity markets and related companies' stocks.

CalPERS said part of its investment would be directly linked to prices of energy, metals and agricultural products.

"That's one for the future, right now it's not something we see influencing metals prices in the near term," a trader said.

Three-month nickel lost $100 to $29,800.

Three-month lead lost a further $20 to $1,550 a tonne after losing more than 6 percent on Monday. Last week, the contract hit a record high of $1,755 a tonne.